Delivered before the Canadian Retail Federation, Toronto, Ontario, April 6, 1943

Vital Speeches of the Day, Vol. IX, pp. 477-479.

OUR question today is whether the retail industry is an essential industry. The question arises because we are at war and because our governments must arrive at policies for controlling the civilian economy as well as policies which control military strategy. It is not a little war. It is an all-out war, and requires an all-out effort. The all-out effort dislocates our usual peace-time affairs by increasing the civilian demand and reducing the civilian supply. Unless the home front is to be destroyed while we are winning victories on the battle-fronts, the home front must be brought under control.

That control is in the hands of the government. The wisdom of the control depends on the government, on its information, and on its attitudes toward more essential and less essential industries. Can we make any contribution here today toward the attitude of the governments concerning the essentiality of retailing?

The government, of course, must view its resources as a whole. The military effort necessarily comes first in emphasis and attention, and nobody in government or out can countenance any other decision. After the military effort has been satisfied the organization of the civilian economy to produce military supplies is the most important problem. As a part of that program the retail industry must be regarded as an essential industry.

Retailing's relation to the war effort is not established by its ability to sell war bonds and stamps (which it has done magnificently in the States and I suppose also here). It is not established by its participation in the government campaigns for the salvage of rubber and copper, fats and greases, and nylon and silk, and the campaigns for victory gardens and efforts to fill up the shortages in manpower. In the States our retail merchants are already making a deep impression on the public in these matters. We have felt that this was the same kind of patriotic duty as the payment of taxes and we have applied to it the same skill which we used to apply before the war to the sale of automobiles, refrigerators, and silk hosiery. But we cannot rely solely on these achievements in establishing the right of retailing to be called "essential."

We are essential because we are the industry, in Canada just as well as in the States, upon which the public must rely in order to obtain the goods which it must have. We do not know of any other way by which the civilian public can get its goods. The retailer is the quartermaster to the civilian population.

Thus the question with which we started is beside the point. The real question is whether the civilian population is essential, and how its needs shall be balanced against the military requirements in this total war.

In Washington we have encountered three different views. They are held in high places and by important officials. They are all alike in emphasizing the primary importance of the military side of the war. The way to win the war is forthe armies and navies of the United Nations to drive the armies and the navies of the enemy into complete oblivion. That comes first.

The views we have encountered differ in their attitude toward the requirements of civilians.

The first view holds that whatever happens to civilians in a total war is unimportant. They are lucky that they are not on the firing line. They should be grateful for whatever they are permitted to have and they have no right to expect any official solicitude. They are too soft and fat anyway and it will toughen them to endure some of the hardships to which their sons and brothers are being subjected every day in the deserts and jungles and on the seas. Whatever happens to civilians is just too bad! This is an extreme view, but it exists in a few places. It needs watching, but it is not so widely held as the second view, and I shall not refer to it again.

The second view is somewhat more realistic. It holds that civilians are essential for war production and for that reason their essential needs must be met. But their essential needs are far below their present scale of living. Proper policy, in this view, is to analyze civilians carefully and to compute their bedrock requirements. How much must they have? How far down can their scale of living be reduced before they will quit or slow down the production of war supplies and munitions? It will be good for their souls if they put on hair-shirts. Once the bedrock economy has been computed, proper policy is to cut the civilian population back to that level as quickly as possible, and throw everything else at the enemy.

The third view is the one which retailers must hold if we are to be conscientious quartermasters. It starts with an entirely different emphasis. It holds that the army and the navy must have everything which they need to win the war as quickly as possible. Munitions and supplies should be manufactured and stockpiled in quantities as large as the transport services can ship and as large as the armed forces can possibly use, with extra quantities for reserves against possible delay and still more as a margin of safety required • to supply the fighting front in spite of enemy submarines. To this end, necessary manpower should be utilized for war production and necessary plant facilities should be converted to war use. Nothing should interfere with the program to throw everything possible at the enemy. But thereafter, the civilian population should be maintained at the highest possible level. There is no need, in this view, to search for a bedrock economy. The limit of the economy is established by what it can have. Under some circumstances it might have to fall below the bedrock, but if that were to happen the cause would be the war itself and not a hair-shirt policy. The maximum-possible policy can be counted on to improve civilian production and to increase the civilian part of the total war effort. The significance of the difference between the bedrockview and the maximum-possible view can be made clear by looking at several issues which now confront us in the States, One is our price policy. Our policy differs from yours in at least three respects. First, you were smart enough at the start to stabilize your prices throughout the entire Canadian economy. Unlike ourselves, you did not merely freeze the prices of some goods but not of others. In the States we left uncontrolled the prices of many farm products, which are the principal ingredient in the cost of living, and we did not control wages, which are a prime ingredient in manufacturing costs. Our costs rose while the prices of many goods were held to the level of the base period. Subsequently we have attempted to stabilize wages, and we have also tried to manage the prices of farm products. If we could have obtained an across-the-board policy at the start, we should not now be experiencing so many dislocations.

The second difference between our price policy and yours is your use of subsidies. We have consistently opposed them because we are afraid of their political implications. We recognize, however, that your use of subsidies has helped to keep your price indexes moving sideways rather than upward, and we recognize further that your subsidies give you a method of determining what shall be produced and what shall not be produced. This positive control is not in our plan. We must still depend upon price as the stimulant to production. I shall come back to that in a moment.

The third difference between our price policy and yours is the administration. Your government had confidence in the businessmen of Canada and appointed them to manage your Wartime Prices and Trade Board. You have utilized their experience and your regulations have been administered by men of ability who understood what they were doing. This has not been our experience. Instead, we have utilized professional economists and lawyers. Our businessmen have been generally disregarded as if they were not to be trusted. It is our impression that your choice was better than ours, and we envy you your Gordons and your Burtons.

The orders which have come from your administration seem to us to be models of perfection in comparison with our own. Our orders are written by bedrock philosophers who have consulted with the businesses and trades in no more than a perfunctory manner if at all, and often only after the order had been signed and sent to the government printer. Recently, for example, a fantastic rayon hosiery order was published. I have not been able to find a single retailer who saw the order in its final form prior to publication. The terms of this order were incredibly bad, and they turned out to be the straw that broke the camel's back. Last week the Central Committee of National Retail Associations asked the Congress to investigate the Office of Price Administration to determine whether it is obeying its own law.

A moment ago I said that we must rely upon price to assure production. It is here that the bedrock view of civilian requirements becomes significant. With the bedrock view dominant, the government establishes its prices without regard for the quantity of production which those prices will permit. Indeed, our Office of Price Administration has never paid any attention to production. We have accumulated a number of cases in which the established price was not sufficient to permit the production of civilian goods. Such an established price is no contribution to the war effort under any view. It is a statistic for the archives, and shows merely what the price would be if the goods had been produced.

If the maximum-possible view should become dominant, there is no doubt that many prices would rise, but at least the goods would be manufactured. Nevertheless the rise would not be a runaway increase. Moreover, the maximumpossible production for civilians after all the military needs have been met is the surest possible protection against the development of black markets, whose prices never appear in the official indexes.

This is a basic decision for our government to make. The bedrock view will not produce the goods. The maximum possible view will produce them.

There is no need to labor further the distinction between these viewpoints, although many other examples could be brought up. We could cite instance after instance in the field of food production, where manpower shortages have become so serious that dairy herds are being sent for slaughter and where acreage must be withheld from planting just at a time when we need all the food production we can possibly get. We could cite cases of attempts being planned to standardize the production of goods well beyond the necessity for standardization, even to the point where machinery in good working order must be turned off and left idle merely because its product does not conform to the standard, and in spite of the fact that materials and manpower are available which are not now needed for military purposes. There are many other examples, but I will not ask you to listen to a complete encyclopaedia of our blunders.

It is enough to say that most of them have arisen out of the bedrock philosophy and out of our government's lack of confidence in the ability and the patriotism of our businessmen.

The issue between the viewpoints is now coming into clearer focus. They are converging in our price policy, our fiscal policy, and our civilian supply policy.

We have a new administrator for our Office of Price Administration. We have the deepest sympathy for him, for his task is to extricate the price policy of the United States from an unbelieveably tangled web of conflicting regulations and personalities. He has an almost impossible task. The retail merchants of the United States wish him well and intend to support him in every move which will establish a reasonable and effective price control, for they have as large a stake in preventing inflation as any other economic group. They should like to be permitted to help, and they begin by offering to Price Administrator Brown the general principle that one of the two ways of preventing inflation is to produce and distribute the maximum possible goods for civilians which are not required by the military effort.

The other way is also receiving consideration. It is the fiscal control of inflation. Our Congress is discussing the need for forced savings through a withholding tax. Such a tax was brought up as one aspect of our recent political argument about the pay-as-you-go plan, and after a time it will come up again. Here again the bedrock view may conflict with the maximum-possible view, and the Congress will have to decide how large a withholding tax should be in order to fulfill all of its necessary purposes and no more.

A third area in which the issue of essential civilian requirements is being discussed is our Office of Civilian Supply. This office is attached to our War Production Board. Up to a few months ago it was engaged primarily in promoting the conversion of civilian production to military production. That task has been practically completed, and it has turned to an analysis of what is left for civilians. In its new assignment it produced the study of the bedrock requirements of civilians, and has already inaugurated a program of production for a good many items which are necessary but which are no longer being produced because in some directions the conversion program had been too successful. The utterances of Mr. Weiner, the director of the Office of Civilian Supply, indicate that he is a partisan of the bedrock philosophy. They also indicate that he is in favor of the general principles of the Maloney bill. This new bill is being discussed in our Senate.

It detaches the function of civilian supply from the War Production Board and establishes a new Civilian Supply Administration under our over-all Board of Economic Stabilization on the same level of prestige as the War Production Board itself, as well as the claimant agencies like the army, navy, Lend-Lease, and others.

Retailers have not yet reached agreement as to the position which they should take on this bill. They agree that the civilian supply function needs a strong position among the claimant agencies but they are not at all sure that still another Washington agency would be able to establish itself and operate effectively in time to be of real value, and they believe that the problem of civilian supply is a war production problem as much as anything else. They have much confidence in the ability and the philosophy of Mr. Nelson, who is the head of the War Production Board, and most of them are inclined to leave the civilian supply function in his hands. The bill contains some additional features which are alarming in the unnecessary extent to which they wouldput the government actively in the business of production and distribution. It has been well said that retailing had asked for an April shower and was handed a hurricane.

Price policy, fiscal policy, and the civilian supply policy are a few of the areas, but not the only ones, in which the bedrock philosophy and the maximum-possible philosophy are beginning to converge. We can expect them to meet squarely, and before long. I am sure the result will interest you and I urge you to follow it in your analysis of the dispatches from Washington which appear in your Canadian newspapers.

To return to our original question, if you agree as a practical matter that you will be able to exploit civilian skills and efforts more successfully for the war effort if the civilians obtain the largest possible amount of goods which is not actually required by the military effort, and if you agree that there is no other way to distribute those goods to civilians except through the retail stores, you must admit that retailing is an essential industry.